This is an archive article published on January 25, 2024

Opinion Express View on food prices: Dal, roti, cheeni

Both producers and consumers would benefit from policy that is predictable and stable, not knee-jerk and reactive

food prices, Sugar prices, wheat production, dal prices, editorial, Indian express, opinion news, indian express editorial

The government approach reflects an excessive pro-consumer policy bias. Such bias, apart from being anti-producer, isn't in long-term consumer interest either. Both producers and consumers benefit from policy that is predictable and stable, not knee-jerk and reactive.

By: Editorial

January 25, 2024 06:45 AM IST First published on: Jan 25, 2024 at 06:45 AM IST

International food prices have eased considerably from their 2022 peaks. The benchmark FAO Food Price Index in December was 10.1 per cent below its level one year ago and 28 per cent down from its all-time high scaled in March 2022, after Russia’s invasion of Ukraine. But this story of global deflation is contrary to the Indian situation, where the official consumer food price index inflation ruled at 9.5 per cent in December. The domestic inflationary pressures are coming from basic foods: Pulses, cereals and sugar. In other words, dal-roti-cheeni. It’s not for nothing that the Centre is worried, especially with national elections due in hardly three months’ time. Retail food inflation averaged just 0.2 per cent during the year leading to the last Lok Sabha polls in April-May 2019. The Narendra Modi government knows that food prices matter for voter sentiment.

The government’s strategy to rein in food inflation has been a heterodox mix of export and trading curbs along with import liberalisation. Thus, exports of wheat, non-basmati white rice, sugar and onion have been banned, denying Indian farmers and agri- businesses the opportunity to benefit from high international prices, whether in 2022 (for the first) or now (for the other three). Stocking limits have been imposed in wheat and pulses for traders, processors as well as big-chain retailers. Curbs have been placed on sugar mills with regard to diversion of cane juice and intermediate-stage molasses for manufacture of fuel ethanol, industrial-grade rectified spirit and potable alcohol. Simultaneously, imports of major pulses and crude edible oils have been allowed at zero or very low duties till March 31, 2025. Notwithstanding all these supply-side measures, rice is retailing at an all-India average (modal) price of Rs 40/kg (Rs 35 a year ago), milled arhar (pigeon pea) at Rs 150/kg (Rs 110), chana (chickpea) at Rs 80/kg (Rs 68), sugar at Rs 45/kg (Rs 40) and onion at Rs 30/kg (Rs 25).

The government approach reflects an excessive pro-consumer policy bias. Such bias, apart from being anti-producer, isn’t in long-term consumer interest either. Both producers and consumers benefit from policy that is predictable and stable, not knee-jerk and reactive. Indian agriculture has been a victim of short-termism, which has deterred much-needed investments in processing, cold storage, marketing and research. Such investments will unleash the productive potential of the farm sector, providing a more sustainable solution to food inflation. Post election, that should also be the focus of the next government.